HI,
we are in the middle of a good postive cash flow purchase, in fact the cash on cash is very high.
The current owner lives on site and manages the boarding house, he is willing to stay after settlement until we can find someone to manage it, which includes some cleaning and laundry.
Any advise about managment of a boarding house? Risks etc? Anything? I am a bit cautious about this property becoming a high management investment…Mortgage Hunter, the major contributor of this forum, should be a ble to give his experience and opinion I believe.
Cheers,
Hi Alwast,
Just a few things for you to consider………. make sure that you check that its been approved by the local Council (planning issues involved) because if its not yet already been approved then it may be very difficult to do so as the zoning may not allow for such an operation to occur in that specific zoning. When i worked for a local Council as a health inspector we used to have to inspect boarding houses (kitchen facilities etc) so beware that you may be subject to inspections…..in SA, most of our local Councils charge for inspections (between $80-$200 per inspection depending on the number of full time employees) now so not sure if this is the case for other states and territories.
Also, make sure you have factored in the appropriate boarding house insurance which is significantly higher than normal home insurance (talking somewhere between $5K – $10K).
They’re the main issues but if you’re only buying because its positive cashflow, then do your numbers carefully after taking into account the management (if you intend on paying someone to manage it for you), cleaning, internet fees , laundromat facilities and the costs associated with this, payphone rental fees etc.
Just a few things for you to consider.
Hope this helps.
Cheers
Kim
Kim Anand
[email protected]“Money Can’t Buy you Happiness but it Does Bring you a More Pleasant Form of Misery”
Strict rules apply to boarding houses now in terms of fire safety and general health and safety related issues much because of what happened in the Childers and Kings Cross backpaker fires.
Make sure you have been in touch with the local council and you make sure that the boarding house conforms to all regulations before purchase and make sure you are not buying a future liability.
Tenancy rules are also different to the average family home market so make sure you are aware of these regulations as well. Also make sure that you know what the tenancy history and vacancy rate is like. You may have to spend a lot of time, effort and money getting new tenants if there is a high turnover rate.
Hope this helps.
Todd Burns
http://www.freepropertyhelp.com.au
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